Lo Doc Loan

A new generation of Low Doc home loans are simplifying the loan process for many self-employed Australians.
Here we explain how they work and look at the pros and cons.
Lo Doc Loans are a special type of home loan provided by financial institutions designed primary for self-employed and small business people for individuals and do not require you to provide proof of income.
This feature is particularly useful because you do not need to spend hours with the accountant pouring over payslips, tax returns and financial statements.
If you are self-employed, you may be denied a traditional home loan due to lack of paperwork to verify your income.
Instead of providing tax returns or financial statements, borrowers simply sign a self-declaration stating their income. You declare what your income is for any particular financial year to the lender, who then uses that stated income as the benchmark to demonstrate your capacity to repay the mortgage.
However, there may be limits on the amount you can borrow generally lenders borrowing ranges from 60 to 80 per cent of the value of the property
The most common low doc home loans in the market provide up to 80% of the value of the property or purchase price.
There are many options and Lo Doc loans are also possible for borrowers who have credit problems.
Higher LVR’s up to 95% may be available at generally higher rates of interestLMI adding to the cost of the loan.
Borrowers can use low doc loans to buy a home, invest in property or refinance existing debt.
While Low Doc Loans reduce the amount of paperwork required from borrowers, most offers the same features as traditional loans, including redraw, offset, early repayment and the choice of a fixed, variable or split interest rate.

In most cases, Low Doc Loans are available to self-employed people who have sufficient income and assets to service a loan but are unable to provide the standard tax returns and financial statements at the time they apply.

When a lender receives a mortgage loan application on a self-certified basis, there is a greater level of ‘credit risk’, than would be with an application supported by detailed financials. Therefore, an expected risk premium, by way of a higher interest rate may be applied.

• Simpler income verification requirements, most lenders let you ‘self-certify’ your income
• Choice of loan types means you don’t have to trade off flexibility for features
• Option of fixed, variable or split rate loan

Cons:

• Limits on how much you can borrow ranges from 60 to 80% of the value of the property
• Lenders Mortgage Insurance may be compulsory, adding to the cost of the loan.

No Deposit Loan

• Borrow up to 100% of the purchase price or valuation
• Get into your new home sooner
• No deposit required conditions apply

If you are Self-Employed or you do not wish to provide your financials for another reason, please talk to our experienced Consultants who specialize in Lo Doc Loans and can assist you with your application.

Equity Loans

This type of loan allows a homeowner to borrow against the accumulated equity in his or her home using the property to secure the debt.
These loans provide access to funds when required, up to the limit set.
The loan may be for a variety of purposes.
The amount that the bank might loan could be determined by the fair market value of the property minus any current mortgages secured by the property, subject to the owner’s other debt commitments and credit history.
You can calculate the equity in your home by taking the value of your home and subtracting out the amount you still owe on the mortgage.

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